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During the month of June, year-over-year declines in auto sales shrank for four out of the major six auto makers. Ford (NYSE: F) saw the smallest drop in auto sales in a year, with only a 10.7% decline when compared to June 2007.

Perhaps the worst is behind us. Jesse Toprak, executive director at Edmunds.com states that "It is unlikely things will get any worse." He points to modest improvements in the overall economy and government incentives that should bring more buyers into the market.

Consumers typically have a short memory. Last summer when gasoline prices were hitting $4 a gallon, everyone was buying smaller, more fuel-efficient cars. That trend changed a bit when prices started to drop, but the recent run up in gasoline prices over the past couple months have sparked interest in fuel-efficient cars once more.

While it can be argued that June sales figures indicate that things may be starting to stabilize, the figures are still rather disturbing. Sales in June were down by 28% when compared to the same period last year.

At first glance, seeing a drop of 28% in year-over-year sales could be seen as a negative indicator, but you have to look at the numbers in relation to recent month's sales figures. The 28% drop in auto sales for June is actually the best year-over-year number that we have seen since back in September. It proves just how hard the auto industry has been hit over the past year.

Can we expect to see this current trend continue? Let's hope so. The quicker we can see sales level off, the quicker we can expect to see rises in auto sales. According to Jim Farley, Ford's head of marketing and communications "The tide seems to have shifted in recent weeks," but he did go on to state that the company remains grounded in its view of the industry given the the current industry and economic challenges that auto makers are facing.

Despite the optimism that is returning to the auto industry, there is still a long way to go before things return to where they were a couple years ago. On an annualized basis, industry wide sales hit 9.7 million units in June. This is roughly 40% lower than where sales levels were for most of this decade.

So while there are still many hurdles ahead for the auto industry, it is good to see some signs of life returning. Is this the beginning of the rebound that we have all been hoping to see? Perhaps, but it is still way too early to assume that this is the case just yet.

What are your thoughts on the auto industry? Is the worst behind us, or should we brace ourselves for more troubles down the road?